Unsecured Promissory Note
An unsecured promissory note is a binding promise to repay a loan without any collateral backing it. The lender relies solely on the borrower's creditworthiness and promise to pay. If the borrower defaults, the lender must pursue legal action to collect the debt rather than seizing property. Unsecured notes are commonly used for personal loans, family loans, and smaller amounts. Because there is no collateral, interest rates on unsecured notes are often higher. Our platform ensures your note complies with your state's usury limits.
Frequently Asked Questions
What is an unsecured promissory note?
An unsecured promissory note is a written promise to repay a loan that is not backed by any collateral. The lender relies on the borrower's promise and creditworthiness alone. If the borrower defaults, the lender must pursue legal action rather than seizing property to recover the debt.
Is an unsecured promissory note legally binding?
Yes. A signed promissory note is legally enforceable regardless of whether it is secured or unsecured. The lender can take the borrower to court to obtain a judgment and collect the debt.
Do I need a lawyer to write a promissory note?
No. A properly drafted promissory note does not require a lawyer to be legally valid. It must clearly state the loan amount, interest rate, repayment terms, and include signatures from both parties. Your Promissory Note generates a legally formatted document that complies with your state's usury laws.
When would I use an unsecured promissory note?
Unsecured notes are common for personal loans between family members or friends, small business loans, or when the borrower has no collateral to offer. Because the lender has no collateral to fall back on, unsecured notes typically carry higher interest rates than secured notes.
Create Your Unsecured Promissory Note
Select your state above or use the button to get started. Instant PDF download for $7.99.
Select Your State - $7.99